When President Obama announced on Thursday that all 50 state attorneys general and the nation's largest mortgage brokers reached a deal on mortgage fraud cases during the housing crisis, what he did not mention is that the details have not been finalized. The Web site that was set up to disclose the settlement only states that an agreement has been reached, and its executive summary only says, "coming soon." And according to American Banker, no one is quite sure what the details are.
The financial trade publication quotes anonymous sources who doubt that such details are even in place. To the consternation of mortgage servicers, American Banker reports that "a settlement term sheet does not yet exist." Although government spokespersons told American Banker that the terms were indeed finalized and will only be revealed once the document is submitted to the courts, those affected by the settlement are not so confident:
Other sources who spoke with American Banker raised doubts that everything is yet in place. A person familiar with the mortgage servicing pact says that a settlement term sheet does not yet exist. Instead, there are a series of nearly-complete documents that will be attached to a consent judgment eventually filed with the court. That truly final version will include things such as servicing standards, consumer relief options, legal releases, and enforcement terms. There will likely be separate state and a federal versions of the release.
Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.
Whatever the reason for the document's continued non-appearance, the lack of a public final settlement is already the cause for disgruntlement among those who closely follow the banking industry. Quite simply, the actual terms of a settlement matter.
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